Malthus on Stilts: Clark Misinterpets the Malthusian Model
In the Malthusian economy before 1800 economic policy was turned on its head: vice now was virtue then, and virtue vice. Those scourges of failed modern states – war, violence, disorder, harvest failures, collapsed public infrastructures, bad sanitation – were the friends of mankind before 1800. They reduced population pressures and increased material living standards.
–Gregory Clark, A Farewell to Alms
The Malthusian model is one of the building blocks of Clark’s magnum opus. Before I critique Malthus, however, it is necessary to rescue him from Clark. For all its flaws, the Malthusian model simply does not imply Clark’s bizarre claims about the wonders of bloodshed and famine.
To get started, let’s go over the Malthusian model. Clark neatly reduces it to two inter-related diagrams.
The first diagram graphs Birth Rates and Death Rates as a function of per-capita income: As per-capita income goes up, Birth Rates rise, and Death Rates fall. In equilibrium, you have a stable population where the Birth Rate equals the Death Rate.
The second diagram graphs Population as a function of per-capita income. This Technology Schedule reflects the key Malthusian assumption that, due to diminishing returns, a bigger population implies lower living standards.
Now where does the conclusion that e.g. harvest failures are good for living standards come from? Clark interprets harvest failures as an upward shift in the Death Rate:
So far, so good. When the Death Rate shifts up, population falls and income goes up. The decline continues until the Birth Rate and the Death Rate are equal at the lower-population, higher-income equilibrium.
What’s the problem? Quite simply, this isn’t how a harvest failure works. Harvest failures don’t directly raise the Death Rate. Instead, they kill people by making a given number of people less productive. In a Malthusian framework, the correct way to represent this shock is with a downward shift of the Technology Schedule.
Intuitively, this means that, due to the harvest failure, a given number of people now produces less income that it used to. And what is the effect? In the short-run, income plummets from y* to y’. Since the harvest failure doesn’t kill people instantly, you initially move along the dotted horizontal line from the initial Technology Schedule to the new Technology Schedule. Eventually, starvation sets in, and you move along the new Technology Schedule back to the old income level, y*.
Thus, the effect of harvest failures in the Malthusian model is to reduce income, which causes starvation, which reduces population, until you eventually get the old level of per-capita income with a new, lower population.
On Clark’s misinterpretation of the Malthusian model, negative supply shocks are good. They’re “the friends of mankind.” On a correct interpretation of the Malthusian model, however, negative supply shocks are bad. Very bad. The only “silver lining” is that some people survive; lower population eventually pulls living standards back up to their initial point. That’s hardly a reason to say “Hooray for harvest failures.”
For Clark’s story to make sense on its own terms, bad stuff would have to directly kill people without affecting the Technology Schedule. If the Angel of Death killed every tenth person, Clark could consistently point to the Angel’s beneficial effects on per-capita income. (Though even there, it’s probably very bad on balance; ex ante, how many people would trade the extra income for a 10% chance of death?) But very few bad things work this way. Plagues don’t just kill people; as Fogel explains, bad health in the pre-modern era also made the living less productive. Wars, similarly, don’t just kill people; they also make it harder for people to do their jobs. And so on.
Bottom line: Whatever the merits of the Malthusian model, it doesn’t support Clark’s strange odes to violence, famine, and filth. In a Malthusian model, these shocks have bad effects that eventually fade out.
P.S. To be fair to Clark, he might argue that some of these shocks shift the Technology Schedule down and directly raise the Death Rate. A plague might do the trick – it kills some outright, and weakens the rest. In the long-run, the survivors will have a higher material level of living. But this hardly makes the plague a “friend of mankind.” All it means is that after mass death, the frail, disfigured survivors will get to eat some extra calories beside the graves of their families. With friends like this, mankind doesn’t need enemies.