Tuesday, 10 April 2012

Unapologetically Dismal Science

A few days ago I was asked about the title for my blog by a group of inquisitive aunts. Admittedly they were more concerned with the fact that I may have described them all as hiding their ‘cloven hooves’. Just for them, here’s another Wodehouse quote:

“If I had my life to live again, Jeeves, I would start it as an orphan without any aunts. Don’t they put aunts in Turkey in sacks and drop them in the Bosphorus?”
“Odalisques, sir, I understand. Not aunts.”

The name Dismal Science refers to the dark, slightly tongue-in-cheek alternate name for Economics; Unapologetically is simply a word with far too many syllables crammed into a small area, which allowed me to take a bizarrely vacant url. While the term ‘dismal science’ is properly attributed to Thomas Carlyle, it’s frequently used to describe the work of Reverend Thomas Malthus, which is where I first came across it a couple of weeks into first year economics. The dark, pessimistic theory it described was one of the first indicators that I might genuinely love economics, and that the decision to change out of Law was a completely justified one.

Considering this is my first post actually dealing with economics, it’s a little more technical than I usually write, however the concepts are interesting and generally simple, so I hope that you’ll bear with me.

As described in the textbook, Malthus’s theory was constructed in two parts: the amount of food each person requires, and the amount of food that each person can produce. The first part increases linearly – each individual person requires the same bare minimum amount of food, on average, to avoid starvation and survive. It can be described with a simple formula Y=NF where N is the population size, F is the necessary food for each person, and Y is the total amount of food required (because Y not?). 

The second part is a little more complicated, taking into consideration the idea of Diminishing Marginal Returns, which basically means that each successive unit of input produces less than the one which preceded it. The idea for this is pretty simple to follow: Malthus believed that the total area of farmable land was fixed, or limited. A farm which only has a few people working on it can produce far more if another person starts working on it; when you have an additional 50 or 100 people however, they will start getting in each other’s way and produce less individually than that first person’s contribution to the farm. Labour for the farm has diminishing marginal returns. 

The same applies for machinery. A single hoe or tractor can make a massive difference in productivity for a farm. When there are a hundred, the workers will be too busy fighting over who gets to use the shiniest one than actually doing any work. The thing to take away from this is that production does not increase linearly – each individual worker does not produce the same amount whether you have 10 or 50. Individual production decreases as the amount of workers increases.

If you've got gardening problems, I feel bad for you son.
I've got 99 problems, and a hoe for every one.
When the amount of food being produced is more than what’s required by the population, there’s a surplus. People eat more, are happier – live longer, and breed like rabbits. The population increases.

When the amount of food being produced is less than what’s required, there’s a shortage. People starve, and aren’t very happy; the mortality rates increase, and while people might still be breeding like rabbits, the overall population decreases.

The effect of this is that the population approaches an equilibrium, where food being produced is the bare minimum to avoid starvation. At this point there is no tendency for population to increase or decrease - it’s a point of stability in misery. It’s a dismal place to be. 

It must be noted that Malthus’s theories were developed before the rise of the Industrial Revolution, and before the extent of globalisation that we see today. You can produce a lot with a hoe or tractor, but you can produce much more using a combine harvester. Technological progress is one of the defining reasons why we don’t simply subsist in a Malthusian equilibrium.

The theory still has some relevance in today’s society: large parts of the world still live in abject poverty and famine, and certain aspects of subsistence agriculture can still be examined using Malthusian theory. Neoclassical Growth Models in particular bear more than a passing resemblance to the Reverend's work.

More importantly, I can finally explain the name of this unfortunately titled blog.

1 comment:

  1. I'll make a correction - Malthus actually dealt with geometric (exponential) population growth, and arithmetic food production. While the analysis here is valid, and yields a similar result, it does not directly flow from Malthus's work. Instead, I'll place the blame solely on a misleading textbook, wiping pedantically sticky egg off my face.