Progress and Poverty · Chapter
II: The Effect of Increase of Population Upon the Distribution of Wealth explained
This chapter examines how population growth affects the distribution of wealth, particularly rent, wages, and capital.
What happens
This chapter examines how population growth affects the distribution of wealth, particularly rent, wages, and capital. It critiques the Malthusian theory and its alignment with Ricardo's rent theory, arguing that increasing population enhances labor productivity through cooperation and exchange, which can offset or even surpass the diminishing returns from cultivating inferior land. The chapter concludes that population growth tends to increase rent and reduce wages proportionally, but may not reduce wages absolutely, and often increases aggregate wealth production.
Themes in this chapter
Distribution of Wealth
The chapter focuses on how population growth alters the distribution of wealth among rent, wages, and capital.
Critique of Malthusian Theory
The chapter argues against the Malthusian doctrine, showing that population growth can increase labor productivity and does not necessarily lead to diminishing returns.
Characters to notice
- John Stuart Mill
Referenced for his views on population pressure and agricultural improvements as a relaxation of the bonds confining population increase.
- David Ricardo
His theory of rent is discussed and critiqued in relation to population growth and the margin of cultivation.
- Thomas Malthus
His doctrine on population pressure is examined and challenged, with the chapter arguing it is not supported by rent theory.
- Unknown
The narrator presents the analysis and critique of existing economic theories.
Key passages
“The manner in which increasing population advances rent, as explained and illustrated in current treatises, is that the increased demand for subsistence forces production to inferior soil or to inferior productive points.”
Standard economic texts explain that population growth raises rent because the need for more food pushes farming onto less fertile land.
This sets up the conventional view that the chapter will critique.
“For increased population, of itself, and without any advance in the arts, implies an increase in the productive power of labor.”
Even without technological progress, a larger population inherently boosts labor productivity.
Key argument against Malthusian pessimism.
“Thus, increase of population, as it operates to extend production to lower natural levels, operates to increase rent and reduce wages as a proportion, and may or may not reduce wages as a quantity; while it seldom can, and probably never does, reduce the aggregate production of wealth as compared with the aggregate expenditure of labor, but on the contrary increases, and frequently largely increases it.”
Population growth raises rent and lowers wages as a share of output, but wages in absolute terms may not fall, and total wealth per worker usually rises.
Summarizes the chapter's nuanced conclusion on distribution.