The Story of Money: Meeting Malthus

You might have heard of the Malthusian Trap in some TV programme, say as part of a solemn, strokey-beard pronouncement by an expert on a panel of very wise-looking, sagely-nodding, well, experts. Let’s unravel it today.We haven’t met our fictional friends lately. Brenda has news for Steve, Bryan, and Irene. The coming weekend is to be another one of those once-a-few-years lavish banquets thrown by the Lord Mayor to all the townsfolk. This is a tradition when there has been a bumper harvest that year.Steve’s first to exult, he’s like, yess, this is great! (Simple guy alert!)And then Bryan’s like, wait so this banquet only happens when we have a surplus harvest, not if we just break even, or worse. (Perceptive fella him!)Brenda confirms, yes, this year we have a surplus of 200 bushels, they’ll be put to good use for the banquet. (Facts-girl is back!)And then Irene... Irene goes, wait a minute, if all the surplus is used up in one grand party after harvest, what progress are we making in the long term by way of additional grain accumulation and reinvesting?!Oh, What’s the Point!So can see the contours of the trap emerging. Thomas Malthus in the late 1700 posited this cycle: an increase in a population’s food production leads to an improvement in their condition, but only temporarily as it leads to greater population, which leads to resource depletion on account of greater consumption, then starvation, famine and disease, and thus a drop in the population, and back to square one.In other words, suggesting that prosperity would always cancel itself out and human lot can never really be improved beyond some sort of a subsistence common denominator. One might see a kind of zero-sum-game cruel gruel with lots of oh-what’s-the-point toppings thrown in.Being an Anglican cleric, he explained this suffering as ordained by God to impose virtuous behavior. Furthermore, Malthus had certain “ideas” around population control and dealing with “the lower classes”, ideas of the sort we wouldn’t be particularly comfortable talking about in decent discourse.So, was Malthus right at all?Time-Warp Traps and Steam ValvesI think by now the answer is fairly clear to us. I mean, some of the initial observation holds true, that an increase in production leads to an increase in population. Among others, I’ve discussed the effects of this swing in TecC 36 and TecC 40 where I discuss the effects of it against the great rise in population in the first centuries after the first millennium and then its drastic fall closer to the mid-millennium.In fact, this had indeed been the lot of human societies since the dawn of agriculture and sedentary civilization (TecC 10). But the funny thing is, by the time Malthus was writing this, the Industrial Revolution was picking up steam in Britain, (steam puns intended oh yes!) making his observations obsolete in his own country first and then further afield.This is because the sudden increase in technological output the Industrial Revolution wrought for the first time ever in history gave humanity the escape velocity to overcome that trap. Realization that there were such drastic changes afoot was gaining ground in the late 1700s, notable mention being Adam Smith’s description of the emerging system in his landmark book, published 2 decades before Malthus’s.So can we say Malthus was trapped in a trap of his own making?There are other ironies too. As I hinted, Malthus insisted on adverse effects on the population and thus his controversial ideas such as “preventive checks”. It has been the case in the ensuing centuries and especially over the last 100 years or so that industrial-grade development and prosperity has in fact ushered in a fall in population rates, not just in the traditional ‘West’ but in almost all parts of the world, to the point that there are many voices now talking about the dangers of depopulation.I don’t want to go into those arguments here but the demographic changes in this direction have been factually documented (currently just the birth rate but in the foreseeable future the actual numbers predicted to drop as well). What would Malthus say if provided with these statistics in our time?What Malthus failed to see was the power of technological ingenuity and the economic effects of harnessing technology (I discuss the first of these in my technocentric series and will continue to tackle the latter aspect in this series).In any case, what are we to learn from all this? Malthus might have been too late in formulating his idea, like investing in a large candle factory just as Edison was electrifying the place, but his theory does help us appreciate the “hockey stick” phenomenon of technological progress and human prosperity brought about, warts and all, by the Industrial Revolution.Would we really want to go back to the, well, Malthusian, misery of the Middle Ages?And how many of the latest strokey-beard theories of our own day would future history prove to be massively Malthusianly mistaken?Article written by Ash StuartImages, video, voice narration and some footnotes generated by AINothing in this presentation constitutes as advice - financial, investment or otherFurther Reading & Reference* How humans escaped the Malthusian trap This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit ashstuart.substack.com