Essentials of Economic Theory Part 15

[Ill.u.s.tration]

_AF_ measures time as before and _AB_ the rate of pay at the beginning of the century. The dotted line _BE_ represents the rise in wages due to the increase of capital, as it more than counteracts the growth of population. The rise of the line _BD_ above _BC_ represents the additional increase in wages which is brought about by improvements of method, and finally, the rise of _BC_ above _BD_ expresses the further addition to the pay of labor which comes by reason of improved organization. The uppermost line _BC_ describes the resultant of all the dynamic changes on the supposition that they act in a natural way.

It will be seen that _BC_ at first rises above _BD_ rapidly and later runs nearly parallel with it. This expresses the fact that while gains insured by organization may continue for a long period, the amount of them does not greatly increase after a fairly efficient type of organization has been secured. On the other hand, the fact that _BD_ rises above _BE_ by a wider and wider interval expresses the fact that gains which come from technical improvements may increase for an indefinitely long time.

_The Rate of Interest contrasted with the Absolute Amount of it; this Amount Increasing._--The changes which make wages rise cause interest to fall and there would seem to be a partial offset for the general gain; but the chief cause of a declining _rate_ of interest is an increase of the _total amount_ of capital. The size of the income which comes to the capitalists as a cla.s.s from their entire invested wealth grows larger wherever the amount of the fund increases more rapidly than the rate of interest falls. A million dollars yielding four per cent gives a larger income than a half million yielding five or six. It is a condition such as this which we have described in outline, and it enables the holders of investments to receive a constantly increasing total return, although the percentage yielded by a given amount invested grows continually smaller.

_The Conditions of Increasing Future Well-being._--The realization of this resultant of all dynamic forces requires that the rate of growth of population should be subject to a natural check, that the increase of capital should not be unduly r.e.t.a.r.ded, that technical improvements should go on, and that the organization which is effected should be of the kind which makes for efficiency but not for monopoly. Compet.i.tion must be kept alive. In altered ways, indeed, the essential power of it must forever dominate the industrial system, as it will do if the state shall do its duty and not otherwise. A dynamic society requires a dynamic government whose enlarging functions are shaped by economic conditions.

CHAPTER XIX

THE LAW OF POPULATION

Since the optimistic conclusion reached in the preceding chapter is contingent on an increase of wealth which is not neutralized by an increase of population, it remains to be seen whether the population tends to grow at a rate that gives reason to fear such a neutralizing.

Does progress in method and in wealth tend to stimulate that enlarging of the number of working people which, in so far as they are concerned, would bring progress to an end? Is the dynamic movement self-r.e.t.a.r.ding and will it necessarily halt? The answer to this question depends, in part, on the law of population.

_The Malthusian Law._--We need first to know whether the growth of population is subject to a law, and if so, whether this law insures the maintenance of the present rate of increase or a r.e.t.a.r.ding of it.

The law of population formulated by Malthus at the beginning of the last century is the single extensive and important contribution to economic dynamics made by the early economists. It was based more upon statistics and less on _a priori_ reasoning than were most of the cla.s.sical doctrines. Even now the statement as made by Malthus requires in form no extensive supplementing, and yet the change which is required is sufficient to reverse completely the original conclusion of the teaching. Malthusianism const.i.tuted the especially "dismal" element in the early political economy, and yet, as stated by its author, it revealed the possibility of a comfortable future for the working cla.s.s. One might look with cheerfulness on every threatening influence it described if he could be sure that the so-called "standard of living" on which everything depends would rise.

The difficulty lay in the fact that the teaching afforded no evidence that it would thus rise. The common impression of readers was that it was destined to remain stationary and that too at a low level. The workmen of Malthus's time were not accustomed to getting much more than the barest subsistence, and not many economists expected that they would get much more, even though the world generally should make gains.

_The Popular Inference from the Malthusian Law._--If we state the conclusion which most people drew from the Malthusian law in its simple and dismal form it is this: Whenever wages rise, population quickly increases, and this increase carries the rate of pay down to its former level. The earnings of labor depend upon the number of laborers; a lessening of the number of workers raises their earnings and an increase depresses them; and therefore, if every rise in pay brings about a quick increase of population, labor can never hold its gains; every rise is the cause of a subsequent fall.

_Malthus's Qualification of his Statement._--As we have said, Malthus so qualified his statement that he did not positively a.s.sert that this would describe the experience of the future; the fall in pay that should follow the increase of numbers might not always be as great as the original rise, and when a later rise should occur the fall following it might be less than this second rise. In some way workers might insist upon a higher standard of living after each one of their periodical gains.

_Why this Qualification is not Sufficient._--The mere fact that the standard of living may conceivably rise does not do much to render the outlook cheerful, unless we can find some good ground for supposing that it will rise and that economic causes will make it do so. We should not depend too much on the slow changes that education may effect, or base our law on anything that presupposes an improvement in human nature. We need to see that in a purely economic way progress makes further progress easier and surer and that the gains of the working cla.s.s are not self-annihilating but self-perpetuating. We may venture the a.s.sertion that such is the fact: that when workers make a gain in their rate of pay they are, as a rule, likely to make a further gain rather than loss. While there must be minor fluctuations of wages, the natural and probable effect of economic law is to make the general rate tend steadily upward, and nothing can stop the rise but perversion of the system. Monopoly may do it, or bad government, or extensive wars, or anarchy growing out of a struggle of cla.s.ses; but every one of these things, not excepting monopoly, would naturally be temporary, and even in spite of them, the upward trend in the earning power of labor should a.s.sert itself. Instead of being hopelessly sunk by a weight that it cannot throw off, the labor of the future bids fair to be buoyed up by an influence that is irrepressible.

_Refutations of Malthusianism._--The Malthusian law of population has been so frequently "refuted" as to prove its vitality. It is in the main as firmly impressed in the belief of scientific men as it ever was, and some of the arguments which have been relied upon to overthrow it require only to be stated in order to be discarded. One of these is the claim that the statement of the law is untrue because, during the century in which the American continent, Australia, parts of Africa, and great areas elsewhere were in process of occupation, mankind has not actually pressed on the limits of subsistence. No intelligent view regards that fact as const.i.tuting anything but an ill.u.s.tration of the Malthusian law. A vast addition to the available land of the world would, of course, defer the time of land crowding and the disastrous results which were expected from it, but with the steady growth of population the stay of the evil influence would be only temporary.

_An Objection based on a Higher Standard of Living._--The second objection is also an ill.u.s.tration rather than a refutation of the Malthusian doctrine; it a.s.serts that the standard of living is now higher than it was, and the population does not increase fast enough to force workers to lower it. Malthus's entire conclusion hung upon an _if_. The rate of pay conformed to a standard, and if that standard were low, wages would be so; while if it were higher, wages would be higher also.

_The Real Issue concerning the Doctrine of Population._--There is a real incompleteness in all such statements. Does the standard of living itself tend to rise with the rise of wages and to remain above its former level? When men make gains can they hold them, or, at any rate, some part of them, or must they fall back to the level at which they started? And this amounts to asking whether, after a rise in pay, there is time enough before a fall might otherwise be expected to allow the force of habit to operate, to accustom the men to a better mode of living and forestall the conduct that would bring them down to their old position. The standard of living, of course, will affect wages only by controlling the number of laborers, and the discouragement due to Malthusianism lies in the fact that it seems to say that the number of workers is foreordained to increase so quickly, after a rise in wages, as to bring them to their old level. Whether it does or does not do this is a question of fact, and the answer is a very clear one. The higher standards actually have come from the higher pay, and they have had time to establish themselves.

Subsistence wages have given place to wages that provided comforts, and these again to rates that provided greater comforts and modest luxuries; and the progress has continued so long that, if habit has any power whatever, there is afforded even by the Malthusian law itself a guarantee that earnings will not fall to their former level nor nearly to it.

_A Radical Change in Theory._--Progress is self-perpetuating. Instead of insuring a retrogression, it causes further progress. The man who has advanced from the position in which he earned a bare subsistence to one in which he earns comforts is, for that very reason, likely to advance farther and to obtain the modest luxuries which appear on a well-paid workman's budget. "To him that hath shall be given," and that by the direct action of economic law. This is a radical departure from the Malthusian conclusion.

_Three Possible Conditions for the Wage-earning Cla.s.s._--Workers are in one of three possible conditions:--

(1) They may have a fixed standard and a very low one. Whenever they get more than this standard requires, they may marry early, rear large families, and see their children sink to their own original condition.

(2) They may have a fixed standard, but a higher one. They may be unwilling to marry early on the least they can possibly live on, but may do so as soon as their pay affords a modic.u.m of comfort.

(3) They may have a progressive standard. There may be something dynamic in their psychology, and it may become a mental necessity for them to live better and better with advancing years, and to place their children in a higher status than they themselves ever obtained.

_A Historical Fact._--The manner in which Malthus was actually interpreted was as much due to the condition of workers in his day as to anything which he himself said. It was small comfort to know that, under the law of population, wages might conceivably become higher and remain so because of a higher standard of living, provided the higher standard was never attained. Facts for a long time were discouraging.

In due time they changed for the better. The opening of vast areas of new land made its influence felt. It raised the pay of labor faster than the growth of population was able to bring it down. This had the effect of establis.h.i.+ng, not only a higher standard, but a rising standard, and as one generation succeeded another it became habituated to a better mode of living than had been possible before. It was the sheer force of the new land supplemented by new capital and new methods of industry that accomplished this. It pushed wages upward, in spite of everything that would in itself have pulled them down.

_A r.e.t.a.r.ded Growth of Population._--If Malthusianism, as most people understood it, were true, population should increase most rapidly during this period of great prosperity, and should do its best to neutralize the effect of new lands, new capital, and new methods. In some places the increase has been abnormally rapid, and in a local way this has had its effect; but if we include in our view the whole of what we have defined as civilized industrial society, the rate of growth has not become more rapid, but has rather become slower during this period. In one prosperous country, namely, France, population has become practically stationary. Even in America, a country formerly of most rapid growth, the increase, apart from immigration, has been much slower than it was during the first half of the nineteenth century.

The growth of population, then, may proceed more slowly or come to a halt, even while wealth and earning powers are increasing. If this is so, a further acc.u.mulation of capital and further improvements in method will not have to struggle against the effects of more rapidly growing numbers, and their effects will become more marked as the decades pa.s.s. There will be a weaker and weaker influence against these forces which fructify labor and they will go on indefinitely, endowing working humanity with more and more productive power and with greater acc.u.mulations of positive wealth. Home owning, savings bank deposits, invested capital, and comfortable living may be more and more common among men who depend for their income mainly upon the labor of their hands. Is this more than a possibility? Is there an economic law that in any way guarantees it? Can we even say that general wealth will, without much doubt, redound to the permanent well-being of the working cla.s.s, and that the more there is of this prosperity, the less there is of danger that they will throw it away by any conduct of their own? The answer to these questions is to be found in a third historical fact.

_The Birth Rate Small among the Upper Cla.s.ses in Society._--In most countries it is the well-to-do cla.s.ses that have small families and the poor that have large ones. It is from the interpretation of this fact that we can derive a most important modification of the Malthusian law. It is the voluntary conduct of different cla.s.ses which determines whether the birth rate shall be large or small; and the fact is that in the case of the rich it is small, in the case of the poor it is comparatively large, while in the case of a certain middle cla.s.s, composed of small employers, salaried men, professional men, and a mult.i.tude of highly paid workers, it is neither very large nor very small, but moderate. In a general way the birth rate varies inversely as the earning power of the cla.s.ses in the case, though the amounts of the variations do not correspond to each other with any arithmetical exactness. If one cla.s.s earns half as much per capita as another, it does not follow that the families belonging to this cla.s.s will have twice as many children. They do, on the average, have more children. There is, then, at least an encouraging probability that promoting many men from the third cla.s.s to the middle cla.s.s would cause them to conform to the habit of the cla.s.s they joined. This cla.s.s is at present largely composed of persons who have risen from the lowest of the cla.s.ses, and any future change by which the third cla.s.s becomes smaller and the second larger would doubtless r.e.t.a.r.d the average birth rate of the whole society.

_Motives for the Conduct of the Different Cla.s.ses._--History and present fact are again enlightening in that they reveal the chief motive that determines the rapidity of the increase of the population.

When children become self-supporting from an early age, the burden resting on the father when he has a comparatively small number of them is as large as it ever will be. If they can earn all they cost when they reach the age of ten, the maintenance of the children will cost as much when the oldest child has reached that age as it will cost at any later time. Even though one were added to the family every year or two, one would graduate from the position of dependence every year or two, and the number constantly on the father's hands for support would probably not exceed five or six, however large the total number might become. The large number of children in families of early New England and the large number of them in French Canadian families at a recent date were due to the fact that land was abundant, expenses were small, and a boy of ten years working on the land could put into the family store as much as his maintenance took out of it. The food problem was not grave in those primitive places and times, and neither were the problems of clothing, housing, and educating. It is in this last item that the key to a change of the condition lay, for the time came when more educating was required, when the burden of maintaining children continued longer, and a condition of self-support was reached at no such early date as it had been in rural colonies.

_The Effect of Endowing Children with Education and with Property._--When children need to be thoroughly educated, the burden of maintaining a family of course increases. An unduly large family means the lowering of the present standard of living for all and a lowering of the future standard for the children. With most workmen it is not possible either to endow many children with property or to educate them in an elaborate way. The fear, therefore, of losing present comforts for the family as a whole and the fear of losing caste by seeing the family drop, at a later date, into a lower social cla.s.s, are arguments against large families.

_Why Economic Progress perpetuates Itself._--The economic motive which causes progress to perpetuate itself and to bring about more and more progress is the determined resistence to a fall from a social status.

The family must not lose caste. It must not sacrifice any of the absolute comforts to which it is accustomed, particularly when so doing entails a degradation. Such is human nature that the unwillingness to give up something to which one is accustomed is a far stronger spur to action than the ambition to get something to which one is not accustomed; and a social rank once attained is not surrendered without a struggle. A tenacious maintenance of status is the motive which figures most prominently in controlling the growth of population and the increase of capital. The rich maintain the status of the family by means of invested wealth, the poor do it by education, and members of the middle cla.s.s do it by a combination of the two.

_Status maintained by Education._--In case of wage earners the need of educating children and the advantages that flow from it overbalance the need of bequeathing to them property; and yet the need of bequeathing property of some kind is a powerful motive also. It is important to enable them to procure the tools of some handicraft, or to secure themselves against dangers from sickness or accident.

Moreover, it is not altogether technical education which counts in this way. Culture in itself is a means, not only of direct enjoyment, but of maintaining a social rank. The well-informed person accomplishes directly what a well-to-do person accomplishes indirectly, in that he gets direct pleasures from life which other people cannot get, and he enjoys consideration of others and has influence with them as an uninformed person cannot. The need, therefore, of educating children for the sake of making them good producers and the need of doing it for the purpose of making them good consumers and of enabling them to make the most of what they produce works against too rapid an increase of numbers.

_The Effect of Factory Legislation._--These motives are powerfully strengthened when they are reenforced by public opinion and positive law. The ambition of workers to secure laws which will forbid the employment of children under the age of sixteen is, in this view, a reasonable wish and one that if carried out would tend to promote the welfare of future generations. It is doubtless true that this is not the sole motive, and some weight must be accorded to the desire to reduce the amount of available labor, and to protect adults who tend machines from the compet.i.tion of children who could do it as well or better. There is, however, an undefined feeling in the laborers'

minds that when children all work from an early age the wages of the whole family somehow become low, and that it takes all of them to do for the family what the parents might do under a different condition.

The Malthusian law shows how, in the long run, this is brought about.

The increased strength of the demand for factory laws and compulsory education is a positive proof of the growth of the motives which put a check on population.

_Absolute Status and Relative Status both Involved._--The absolute comfort a family may enjoy and its social position are both at stake, and we need not trouble ourselves by asking whether the comparative motive--the need of keeping pace with others in the march of improvement--will cease to act if a whole community advances together.

We saw at the outset that this motive acts powerfully on a superior cla.s.s, which has before its eyes a lower cla.s.s into whose rank some of its members may possibly drop. The lowest cla.s.s must always be present, however a community may advance, and a well-to-do worker will always dread falling into it. If it should grow smaller and smaller in number, and if the second of the three cla.s.ses we are speaking of should grow larger, the dread of falling from the one to the other would not disappear. The relative status--that which appeals to caste feeling and the desire for the consideration of others--would continue to be influential, as well as the desire for positive comforts; and the motive that depends on comparisons might even be at its strongest when the lowest cla.s.s should so dwindle that few would be left in it except cripples, the aged, or the feeble-minded. An efficient worker would struggle harder to keep his family out of such a cla.s.s than to keep it out of one which would have upon it only the ordinary stigma of poverty.

_Checks more Effective as Wealth Increases._--It is clear that the dominant motives which restrain the growth of population act more powerfully on the well-to-do cla.s.ses than on the poor. The need of invested wealth, the need of education, the determination to adhere to a social standard of comfort and to avoid losing caste, are stronger in the members of the higher cla.s.ses than in those of the lower ones, and become more dominant in the community as more and more of its members belong to the upper and the middle cla.s.ses.

_Immediate Causes of a Slow Increase of Population._--The economic motive for a slow growth of population can produce its effect only as it leads to some line of conduct which insures that result. Means must be adopted for attaining the end desired, and when one looks at some of the means which are actually resorted to, he is apt to get the impression that an indispensable economic result is in some danger of being attained by an intolerable moral delinquency. Must the society of the future purchase its comforts at the cost of its character?

Clearly not if the _must_ in the case is interpreted literally. A low birth rate may be secured, not at the cost of virtue, but by a self-discipline that is quite in harmony with virtue and is certain to give to it a virile character which it loses when men put little restraint on their impulses. Late marriages for men stand as the legitimate effect of the desire to sustain a high standard of living and to transmit it to descendants; and late marriages for women stand first among the normal causes of a r.e.t.a.r.ded growth of population.

Moreover, the same moral strength which induces men to defer marriage dictates a considerate and prudent conduct after it, and prevents unduly large families without entailing the moral injury which reckless conduct involves. On the other hand, there may be an indefinite postponement of marriage by cla.s.ses that lack moral stamina and readily lapse into vice. There are vicious measures, not here to be named in detail, which keep down the number of births or increase the number of deaths, mostly prenatal, though the infanticide of earlier times is not extinct. By strength and also by weakness, by virtue and also by vice, is the economic mandate which limits the rate of growth of population carried out. A limit of growth must be imposed if mankind is to make the most of itself or of the resources of its environment. There is no great doubt that it will be so imposed, and the great issue is between the two ways of doing it; namely, that which brutalizes men and depraves them morally and physically, and that which places them on a high moral level.

_Moral Losses attending Civilization._--There is little doubt that vice has made gains which reduce in a disastrous way the otherwise favorable results of increasing wealth. The "hastening ills" that are said to attend acc.u.mulating wealth and decaying manhood have come in a disquieting degree and forced us to qualify the happy conclusions to which a study of purely economic tendencies leads. The evil is not confined to the realm of family relations, but pervades politics, "high finance," and a large part of the domain of social pleasures.

The richer world is the more sybaritic--self-indulgent and intolerant of many moral restraints; and if one expects to preserve an unquestioning trust in the future, he must find a way in which the economic gains which he hopes for can be made without a casting away of the moral standards which are indispensable. The greatest possible achievement in this direction would be an abandonment of vicious restraints on population and a general increase of the forethought and the self-command which even now const.i.tute the princ.i.p.al reliance for holding the birth rate within prudent limits.

_The Working of Malthusianism in Short Periods as Contrasted with an Opposite Tendency in Long Ones._--There is little doubt that by a long course of technical improvement, increasing capital, and rising wages, the laboring cla.s.s of the more prosperous countries have become accustomed to a standard of living that is generally well sustained and in most of these countries tends to rise. There is also little uncertainty that a r.e.t.a.r.ded growth of population has contributed somewhat to this result. One of the facts which Malthus observed is consistent with this general tendency. Even though the trend of the line which represents the standard of living be steadily upward, the rise of actual wages may proceed unevenly, by quick forward movements and pauses or halts, as the general state of business is flouris.h.i.+ng or depressed. In "booming" times wages rise and in hard times they fall, though the upward movements are greater than the downward ones and the total result is a gain.

Now, such a quick rise in wages is followed by an increase in the number of marriages and a quick fall is followed by a reduction of the number. The birth rate is somewhat higher in the good times than it is in the bad times. Young men who have a standard of income which they need to attain before taking on themselves the care of wife and children find themselves suddenly in the receipt of such an income and marry accordingly. There is not time for the standard itself materially to change before this quick increase of marriages takes place, and the general result of this uneven advance of the general prosperity may be expressed by the following figure:--

[Ill.u.s.tration]

The line _AC_ measures time in decades and indicates, by the figures ranging from 1 to 10, the pa.s.sing of a century. _AB_ represents the rate of wages which, on the average, are needed for maintaining the standard of living at the beginning of the century; and _CD_ measures the amount that is necessary at the end. The dotted line which crosses and recrosses the line _BD_ describes the actual pay of labor, ranging now above the standard rate and now below it. Whenever wages rise above the standard, the birth rate is somewhat quickened, and whenever they fall below it, it is r.e.t.a.r.ded; but the increase in the rate does not suffice to bring the pay actually down to its former level. The descent of the dotted line is not equal to the rise, and through the century the earnings of labor fluctuate about a standard which grows continually higher.

The pessimistic conclusion afforded by the Malthusian law in its untenable form requires (1) that the standard of living should be stationary and low, and (2) that wages should fluctuate about this low standard. In this view the facts would be described by the following figure:--

[Ill.u.s.tration]

_AC_ measures a century, as before, by decades, and the height of _BD_ above _BC_ measures the standard of living prevailing through this time. The dotted line crossing and recrossing _BD_ expresses the fact that wages sometimes rise above the fixed standard and are quickly carried to it and then below it by a rapid increase in the number of the laborers.

_Members of the Upper Cla.s.ses not Secure against the Action of the Malthusian Law if a Great Lower Cla.s.s is Subject to It._--It is clear that if the workers are to be protected from the depressing effect which follows a too rapid increase of population, the Malthusian law in its drastic form must not operate in the case of the lowest of the three cla.s.ses, so long as that is a numerous cla.s.s. A restrained growth in the case of the upper two cla.s.ses would not suffice to protect them if the lowest cla.s.s greatly outnumbered them, and if it also showed a rapid increase in number whenever the pay of its members rose. The young workers belonging to this cla.s.s would find their way in sufficient numbers into the second cla.s.s to reduce the wages of its members to a level that would approximate the standard of the lowest cla.s.s. Under proper conditions this does not happen; for the drastic action of the Malthusian law does not take place in the case of the third cla.s.s as a whole, but only in the case of a small stratum within it.