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Monday, August 27, 2012

The Division of Labor and the Number of Men (the Population Problem)

The relationship between the division of labor and population movements, which we have just touched upon, is so important that it merits closer investigation. This relationship is a reciprocal one: the extension of the division of labor increases productivity, thereby augmenting the capacity of the economy to absorb population in-creases. But the converse is equally true: an increase in population permits, in turn, the attainment of a greater degree of division of labor. As Adam Smith has shown in a celebrated passage of his Wealth of Nations (Book I, Chapter 3), this reciprocal relationship is clear from the fact that the division of labor is inevitably limited by the extent of the market (law of the extent of the market). The division of labor is limited, that is to say, by the number of possible purchasers of the goods produced, a high degree of specialization becoming profitable only where output levels can be high. One of the factors that most affects the extent of the market—though obviously not the only one—7 is the size of the population. Is a continual increase in population therefore desirable?
It is useful here to recall that the nineteenth century, which is associated with the greatest population increase in history, was ushered in with a doctrine which expected from population growth only misery, want, and famine. This was the pessimistic theory of Robert Malthus (1766-1836). Since Malthus uttered his cry of alarm, more than a century has elapsed, and in this period many events have occurred which put his doctrine in an entirely different light. The populations of the industrial countries have multiplied many times over and yet the average standard of living in these countries has risen to an extraordinary degree. Simultaneously, the agricultural production of the world has increased in many countries to an extent where there is more concern about the problems of overproduction than of insufficiency. Concurrently, in one country after another techniques which permit the separation of sexuality and procreation have been ever more widely disseminated. Old mores have succumbed to new attitudes until the practice of birth control has become increasingly a simple matter of habit. The result has been a sharp decline in the birth rates of almost all the countries within the orbit of Western civilization.
At the same time, however, other occurrences caused populations in the civilized world to increase sharply in absolute terms. The gigantic strides in recent times of hygiene, medicine, and standards of living offset falling birth rates by declines in death rates. The decline in death rates occurred, first, among the youngest age groups. While in former centuries perhaps two of every ten children survived the hazards of infancy, it became possible in the nineteenth century to keep them all alive. Now if this development is not immediately redressed by an equally lower birthrate, there inevitably results a sharp vertical increase in population. This is precisely what happened in the civilized world of the nineteenth century and which is still happening in the young countries of the Western world and in the so-called underdeveloped countries. The extraordinary population growth of the nineteenth and twentieth centuries is thus the result not of a rise in the birth rate, but of a decline in the death rate in conjunction with a continuing high birth rate. Two historical developments overlapped each other: the newly discovered hygienic techniques caused a rapid decline in the death rate while the birth rate, influenced still by deeply rooted traditional mores, continued to hold to the old high levels. This is a thoroughly natural phenomenon, for though the death rate can be lowered by external and collective measures, a fall in the birth rate is a long term process, growing out of slow changes in people’s attitudes. To express the point in more drastic terms: the chlorination of the communal water supply will result in an immediate and rapid decline in the death rate, but it will not reduce the birth rate.
Those countries which are now coming under the influence of Western civilization are experiencing just what the older nations experienced in the nineteenth century. The death rate declines at once and sharply, whereas the birth rate does not follow this decline until much later; as a result, population spurts up like a string bean after the rain. Sooner or later, there will occur a moment when the birth rate in such countries is “Westernized” and adjusts to the lowered death rate. The headlong increase in population in such case slows and may ultimately cease altogether. Most Western countries have come rather close to the final stages of this evolution of which they were the inaugurators. How very risky it is, however, to project a given trend dogmatically into the future, particularly where population movements are concerned, is shown by the example of the United States and France in which birth rates recently have risen to a remarkable degree. But there is little concern today over this phenomenon, in contrast to the fears of Malthus and his time. On the contrary, for contemporary Western statesmen, it is declines in birthrates which are the greatest source of worry.
The several reasons for this curious change in attitude can be examined here only briefly. The emphasis given to the national interest, for instance, is considerably greater today than in Malthus’ time. We tend to be concerned lest the birth rate in our own country fall below that of other countries. In addition, we have learned to pay more heed than formerly to the unfavorable consequences of a falling birth rate. There are a variety of motives, of course, which underlie conscious restriction of family size and their moral content will be found to be decidedly uneven. There is no doubt that the small family is quite often the result of deliberate selfishness which, if widely practiced, can weaken the moral fiber of a whole people, not to speak of the religious objections thereto. Here we have the genesis of a tragic situation wherein the modern rationalist spirit, under whose aegis the startling decline in the death rate took place, may overreach itself and in its fall drag down both the birth rate and the moral health of the nation. Clearly, the birth rate must be adapted to the exigencies of a diminished death rate if social and economic catastrophe is to be averted. But if free rein is given to the forces able to bring about an equilibrium of births and deaths, namely, to rationalist thought, the decline in the birth rate may get out of hand.
In the final analysis, of course, declines in the death rate will encounter natural limits set by the present state of medical knowledge in the advanced countries. The birth rate, on the other hand, can theoretically fall to zero. Hence, it is conceivable that an overlapping of population movements such as we have described above could again take place, but in an inverse sense this time (stable or slightly rising death rate plus rapidly falling birth rate), resulting in an absolute diminution of population.
A further circumstance which has caused the decline in the birth rate to be regarded in an unfavorable light is its differential character. The experiences of all countries show that birth rate declines begin at the apex of the social pyramid, with the well-to-do and educated classes having one child or no children, whereas the poorer members of society typically beget numerous offspring. Indeed, more often than not, it is the drunkards and the feeble-minded who have the most children. The unfortunate aspect of such a differential decline in the birth rate is that parents who would normally transmit to their children exceptional gifts of heredity and who have the material means of providing them with a good education are not reproducing themselves. Clearly, the qualitative and eugenic aspects of population movements must be taken into consideration as well as the merely quantitative aspects. But these matters, about which there is much discussion at present, require a breadth of treatment which our present inquiry does not permit.
The main reason why the present decline in the birth rate is regarded differently than it would have been in Malthus’ time must be sought in the domain of economics. The fact is that the enormous population increases of the nineteenth century have not resulted in an impoverishment of the masses; the catastrophe foretold by Malthus has not taken place. On the contrary, the population explosion has been accompanied by striking increases in the average standard of living. It is to be observed, however, that the population increases of the nineteenth century took place under special conditions which are not likely to recur. The same historic forces which resulted in a lowering of the death rate and thus in an explosive increase in population—viz., the scientific spirit, the belief in “progress,” the breaking of the fetters of tradition—all these led to industrialization, to world trade, to the colonization of new rich lands of vast extent. England and Germany, and the other countries for which Malthus predicted overpopulation, solved the problem of feeding their additional millions by superimposing on the agrarian foundation of the national economy an industrial second floor. Concurrently, huge surpluses of foodstuffs were being produced in the new overseas territories, in great part by people who had in the course of the nineteenth century emigrated from the Old World.
But these are unique developments which are not likely to be repeated. The globe in the interim has been fully preempted and mankind no longer has at its disposal a second valley of the Mississippi or a second Argentina. Consequently, those countries which are only now experiencing the vertical upsurge in population which the industrial nations of Europe experienced in the nineteenth century are finding the population problem ever more difficult to solve. This is true of countries such as Italy and Japan, whereas Russia is in the fortunate position, as a result of its enormous territorial acquisitions in the nineteenth century (not to speak of its more recent gains), of being assured of an almost inexhaustible supply of room for further population increases.
To return to Malthus: the population increases which he predicted would be fraught with the direst consequences for mankind have, in fact, taken place, and at a rate which would have been inconceivable in his day. But the catastrophe which he foretold has failed to materialize. Later, as the nineteenth century merged into the twentieth, Malthus’ first prophecy was proved false: the rate of population increase fell sharply. Do any of Malthus’ pessimistic theories still have validity?
To judge Malthusianism fairly, we should distinguish in it two parts: prophecy and analysis. Prophetic Malthusianism had argued that an ineluctable law of nature will cause population to increase unrestrainedly to the limits of the available food supply. Subsequent developments proved this prediction to be completely false. Population growth is not subject to any unyielding natural law; it is a phenomenon of the civilized world and hence an extremely complex phenomenon resulting from the combination of a wide variety of factors. The failure of these prophecies to come true does not, however, constitute a refutation of analytic Malthusianism. This is concerned simply with determining whether a given population increase should be judged as good or evil. It is this question alone which possesses interest for us today.8
But the question in this form is too vague to admit of an unambiguous reply. The answer depends on the aspect from which population growth is viewed. He who is concerned primarily with the size of the country’s military establishment will answer differently than the pacifist; he who considers the emergence of cities with millions of inhabitants as evidence of the progress of civilization will answer differently than the lover of solitude who views the rise of the masses as a development inimical to civilization. A final answer to the question of whether population increases are good or bad is thus dependent on one’s value judgments and is outside the competence of strictly scientific inquiry. The economist must content himself with the more restricted but still very important task of studying the effects of population increases on the material welfare of individuals. But even this limited inquiry is itself so difficult and so complex that space does not permit us to pursue it in any but the broadest outlines.
The invariable answer made to those who are skeptical of the supposed material benefits of population increases is that since each man is born not only with a mouth but with a pair of arms, population growth increases not only consumption but production. Each human being, so runs the argument, creates his own additional economic room and, indeed, enlarges it since population growth permits of a greater degree of division of labor. According to this optimistic theory, population growth will result not in a lessening but in an increase in the average standard of living. Is this widely held opinion solidly established in fact?
That population growth allows of the attainment of a greater degree of division of labor is a fact on which we agreed at the beginning of this chapter. But this is no proof of the truth of the optimist population theory and for three reasons. First, population growth is, as we have seen, not the only condition required for an enlargement of the market. Secondly, the division of labor cannot be extended indefinitely without encountering dangers and difficulties (which we shall presently specify) which set effective limits to the process. The division of labor, moreover, cannot exist on an extended scale in the absence of those extra-economic conditions of whose importance the present world situation has made us painfully aware. A fateful nexus of cause and effect brings it to pass that precisely those internal and external political tensions caused by population growth contribute to the undermining of the foundations upon which an intensive division of labor rests. As the historical experiences of the most heavily populated countries show, these tensions soon lead to radicalism in internal and external policy. It is unfortunate but true that our mass civilization has served to enfeeble rather than strengthen the fundaments of order and security which an intensive division of labor requires.
At the very least, it must be conceded, we have no guarantee that population growth of itself will assure the maintenance of the extra-economic conditions necessary to an intensive division of labor in as automatic a fashion as it assures the existence of the necessary economic factor, to wit, the extension of the market. It is an enviable brand of optimism which, in the face of these reflections and in the face of the difficulties the world is currently experiencing, can continue to view with unconcern further population increases. But such optimism becomes a veritable enigma after examination of a third point. The productivity-increasing effect yielded by an intensification of the division of labor, which in turn results from an increase in population, is in direct conflict with an opposite productivity-diminishing effect caused by the increasing scarcity of the factors of production (land, natural resources, capital) relative to the increasing population. The growing population intensifies competition for these factors, raises their costs, and thus diminishes their yield, relatively speaking. Which one of these conflicting tendencies will prevail cannot be determined in advance; but obviously, the answer will be decisive in judging whether a given population increase will increase or diminish economic welfare.
Let us once again review these complex and exceedingly important considerations. Let us note, first, that it is not the total production of a country with which we are here concerned; for then countries such as China or India with their fabulous resources and enormous national incomes would be the richest countries and not the poorest. What is decisive, rather, is the amount of production per caput of the population. If we call this amount the social share (total production divided by total population), we may pose the following decisive question: what is the effect of population growth on the social share of production? Does it increase or diminish it? The answer to this question, however, depends upon whether the increase in production which follows population growth develops proportionately, over-proportionately, or under-proportionately to such population growth. In the first case (if we ignore certain incidental influences on production such as inventions, etc.), the social share remains the same despite the increasing population; in the second case, it increases, and in the third, it diminishes. To put the matter in more familiar terms, the increase of population in the first case leaves the average standard of living unaffected; in the second case it raises it, and in the third case, it lowers the standard. It is obvious that it cannot be determined in advance which of the three cases will occur, all three being possible in principle.
If we disregard the—for our purposes—uninteresting case in which the increase in production is proportional to the increase in population, there remain the possibilities of an over-proportional or an under-proportional production increase. If population growth brings in its train an over-proportional increase in production, we have a case of underpopulation because a population increase would now be to the economic advantage of the nation. If, on the other hand, population growth is accompanied by an under-proportional production increase, we are faced with overpopulation because continued population growth is no longer economically desirable. At some point between the condition of underpopulation and the subsequent condition of overpopulation is found the optimum population. When a country has reached the point of optimum population, it is placed before the necessity of opting for either an increase in the standard of living or an increase in population. One excludes the other. As population continues to grow, this optimum point must be reached, sooner or later, in every country; and it must be considered as exceeded when the social share of production is smaller than it would have been with a smaller population, other things being equal.
The foregoing considerations should serve to correct a number of misconceptions, for example, the belief that technical progress and the bringing of new lands under cultivation will continue indefinitely to furnish the wherewithal for additional millions of human beings. No one denies, of course, that the possibilities of increasing production are still very great. But this is completely irrelevant to the problem we are here analyzing. The question of prime interest is whether mankind would not be better off if these increases in production were not always accompanied by population increases. Why is it necessary that every enlargement of economic room which is achieved by the labors and the ingenuity of the existing population be immediately filled by millions of new individuals instead of serving to increase the well-being of those now on earth?
The point of significance here is that it is not legitimate to regard an increase in the social share of production as proof of the absence of an overpopulation problem. For the increase in the social share might have been still greater if the population had not increased. Such would be the case where the increase in production, which caused the increase in the social share, were the result not of a population increase but of technological and organizational innovations. By itself, a rise in the average standard of living does not, therefore, exclude the possibility that a country may be suffering from overpopulation in the sense here defined. The rise in the living standards of many European countries during the past fifty years is no proof that these countries had not already passed the optimum population point. What follows will help to clarify this relationship.
The sudden rise in living standards during the past one hundred years ought not be allowed to conceal the fact that this rise has not been as great as we might have expected considering the extraordinary increase in the productivity of the economic system in this period. There is a certain disproportion here which demands explanation. This is the disproportion between “progress and poverty,” a phenomenon which has perennially engaged the attention of socialists of every shade of belief and which has prompted them to seek its cause in alleged basic defects of our economic system. An inveterate complaint of such persons is that under our economic system “economics” destroys what “technology” gains. It is not surprising to find that it is the technicians who tend to entertain this opinion and to regard economists with the same indignation and condescension that military men are wont to display towards diplomats. We have not the space to examine the multitude of misconceptions upon which this attitude of the socialists and the technicians is based. Did space permit, we could make a number of points calculated to enlighten the technicians, in particular, for example, that 100 per cent efficiency is no more to be expected from the economic system than from the most perfect motor. One thing, in any case, is certain: the lag of standards of living behind technological progress and increases in productivity cannot be explained by the fact that a part of what was properly owing to the people of the fruits of such progress has been withheld in favor of a few rich capitalists. This theory, abandoned today by almost all serious socialists, is refuted by a simple calculation which shows how little the average income of the population would increase if recourse were had to a rigorously equal distribution of the existing wealth, even under the much too favorable assumption that total production would not suffer from such action. How then can the apparent contradiction be explained? The only explanation which remains is that technological progress has served mainly to facilitate the existence on earth of a larger number of people instead of serving to increase the living standards of the existing population. It appears that the “disproportions” engendered by capitalism are in large part explained by the fact that this economic system had to spread its immense creative force for well-being in two directions at once: (1) to increase average standards of living and (2) simultaneously to give a foothold in life to huge numbers of newcomers. It is evident that the dilemma of having to choose between an “increase in population” and an “increase in the standard of living” is not a dilemma of yesteryear alone. It is one which at present confronts such countries as Japan, India, and Egypt in particularly acute form.
It would take us too far afield to expatiate here on the qualifications, and they are many, which must be brought to the theory of optimum population. To forestall misunderstanding, it must be emphasized that the theory is concerned only with the purely material and individual consequences of population growth.9 Thus, even when a country has passed the economic optimum of population, an increase in population may still be deemed desirable for non-economic reasons. But within this wide range of possibilities, it is useful to have a clear idea about the alternatives which exist and to weigh these against each other.
There are, in sum, three possibilities. The first is to brake the rate of population increase by increasing the death rate. This method, obviously, cannot be part of a conscious demographic policy, although there are those who believe that the modern paraphernalia of hygiene, inoculation, and medical care with which we are surrounded from the cradle to the grave have their disadvantages. For these techniques conflict with the selection of the fittest individuals and thus weaken our natural forces of resistance to, for example, epidemics still unknown. That such epidemics, conjoined with the atom bomb and bacillus warfare, might make short shrift of our modern mass civilization is a possibility. But no one seriously entertains the idea that we can consciously decide to increase the number of deaths. Thus, if we wish to restrain population increases, we shall have to reestablish an equilibrium between births and deaths, not by increasing the death rate, but by lowering the birth rate, a method which is already in wide use in many countries. That this is a method attended with considerable risks and disadvantages has already been noted. Among these disadvantages must be included the fact that a decline in the birth rate causes a shift in the age structure of the population in favor of the aged, a development which cannot be regarded as good in all circumstances. The full significance of these dangers and disadvantages becomes apparent when we recall the alternatives which are open to us.
A conscious increase in the death rate is, as we have seen, out of the question. There remain only the alternatives of braking population increases by lowering the birth rate, or of perpetuating the disequilibrium between births and deaths by allowing population to increase unrestrainedly. Let us reflect on exactly what this latter course would mean. It would mean that an increase in world population which issued from a special set of causes and may be considered, in virtue of its extraordinary tempo and extent, a phenomenon unique in history, would suddenly be regarded as the normal experience of the human race. Every thinking person must reject this view and admit that, sooner or later, it will become necessary to restrain such population increases as we have witnessed in recent times and to reestablish the rate of growth which is sanctioned by history. So why not sooner than later? A cogent argument for present action is the fact that we are compelled, under modern conditions, to pay a double price for continued population growth: in the form of a very probable decline in average standards of living, and in the form of a certain increase in the rigidity and instability of our economic system as the result of a division of labor which is becoming ever more extreme. It is this last effect of which we must now speak.

Economics of the Free Society

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