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Institutions and American econ... Reply to Clark...

Gregory Clark emailed me the following reply to my criticism and asked me to post it to the blog. I'm happy to oblige. Everything that follows is Clark, not me.



Clark right on Malthus!

Bryan Caplan raises some interesting points in his criticism of my interpretation of the perverse role of sources of higher mortality in raising living standards in the pre-industrial world. But he is wrong for three reasons.

(1) Even if something that caused higher mortality lead to a lower technology schedule, in equilibrium real incomes would still be higher.

(2) Most of the sources of higher mortality in the pre-industrial era had no effect on production processes.

(3) Even taking into account excess deaths from the onset of diseases such as the Plague, they still were blessings!


(1) Caplan replaces my figure 2.1 with one where disease and harvest failures cause the technology schedule to move down but leave the death rate unchanged. But even if he is correct that bad stuff killed people but also affected production possibilities, then the new picture should still involve a shift in the death schedule. i.e.
clarkrep.jpg

Just looking at this new figure you can see that while the new equilibrium involves more population decline, real wages rise just as much as before. What Caplan has done in redrawing the figure his way is to assume that extra disease has no effect on the death rate at a given material living standard. But this is just to assume away the possibility that the death schedule could change. Now that is a pretty strong assumption, and one demonstrably untrue.

(2) “For Clark's story to make sense on its own terms, bad stuff would have to directly kill people without affecting the Technology Schedule.” (Caplan).

In fact there was lots of “bad stuff” in the Malthusian era that had just the effect Caplan denies possible.

England, for example, in 1348 was a settled, secure agrarian society with a population of 4.9 million people extracting a modest living from a fixed farmland area of 26 million acres.

Then the Plague arrived. Assuming this was Bubonic Plague, 80% of the afflicted would die within 7 days. The other 20% would fully recover within a few weeks. As the plague marched across England, village by village, by 1350 the population had fallen to 3.4 million. One third of the population was gone within months.

But the economic disruptions of this medical catastrophe were remarkably limited. The harvest of 1349 was successfully brought in. Prices of wheat which were 9 d. a bushel in 1348, were 6 d. a bushel in 1349, and 8.5 d. a bushel in 1350.

Other prices adjusted exactly as if an invisible hand had overnight removed one third of the population. Real wages doubled. Capital goods, such as oxen, fell in price from 12 s. in 1348 to 6 s. by 1350. Labor intensive goods – linen, nails, etc. - became more expensive. Goods such as pepper, imported from southern India, continued to be available at little change in price.

The Plague, in exactly the way Caplan denies is possible, took away people but left the economy entirely intact.

For the next 200 years periodic visits of the Plague kept English population at this new low level. Indeed population by 1450 was down to 2.4 million. But the English enjoyed unparalleled prosperity. The real wages of farm workers in 1450 were not again equaled until World War I, 150 years after the onset of the Industrial Revolution. Life expectancy in 1450 seems to have been little lower than in 1300, since the plague deaths were counterbalanced by lower mortality from other diseases caused by poor material living conditions.

Thus the following factual statement is unequivocably true: - “The Plague raised English material living standards.”

(3) The normative statement: - “England was lucky to have been struck by the plague” is more debatable. But let me make that case. 1.5 million people died prematurely in 1349. In return 6 generations got to live very well with little further excess deaths. And then 1.5 million people got to live longer as the plague weakened its grip in the 16th century, and the population returned to its earlier level. The unlucky generation of 1349 was counterbalanced by the lucky generations of 1540-1620.

God smiled on the English when he delivered the plague!

What about the other “bads.” Other diseases like influenza and smallpox would operate in just the same way. Bad sanitation that swept away people with cholera and dysentery would have just the same affect. There are wasting diseases that weaken people a long time before killing them. But in the pre-industrial world most variation in mortality was from stuff that killed children or let them live.

Infanticide, which again takes people without disrupting production, was all good in terms of living standards in this world. The strong Christian prohibition of this would just reduce material living standards compared to the Roman world, or Tahiti, where it seems to have been common.

In the light of (1) and (2) I stand by my conclusions on the paradoxical nature of the Malthusian era.


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COMMENTS (7 to date)
caveat bettor writes:

I think averaging the mortality rate in these scenarios hides a problem. Whether a society's life expectancy is 45 or 90, it seems to me the most productive strata will be the middle tercile (i.e. 15-30 or 30-60, respectively).

So higher infant mortality and lower mortality rates have much less marginal impact, whether at the macro or family level.

General Specific writes:

The real problem, the way I see it, is that that ultra-libertarian Julian Simon-ish Ayn Randian utopians cannot accept the concept of limits on human beings (because of their "ideas have no limits" idea), and therefore Malthus must be "proven" wrong--along with all implications of malthusianism.

That Malthus may have been right in the past raises the ugly possibility that he may be proven right again--e.g. as global energy production peaks, as appears to be taking place right now.

So they will do anything the can to disprove it.

N. writes:

General Specific -

I tend to dismiss malthusian prophecies on the basis that the weight of human history doesn't suggest to me there are any limits on innovation. What evidence do you have, given the obstacles that we have overcome to arrive into the 21st Century, that we won't be able to survive the heat death of the universe?

Seriously now, you can make the argument -- logically, even -- that just because the sun has always risen doesn't mean it won't fail to rise tomorrow. But what possible purpose (beyond the hope you will have the eventual satisfaction of saying "I told you so") does it serve to predict disaster, gloom and doom?

Matt McIntosh writes:

*mumbles something about Derek Parfit and wanders off to the library*

TGGP writes:

Julian Simon was focused on the post-Malthusian era. Malthus is indeed the wrong person to look to on that, which is why Simon made a fool out of Ehrlich.

General Specific writes:

TGGP: I always thought that was a stupid bet on Ehrlich's part. Just as I thought that Julian Simon's statements about human population were ill-thought out, and he admitted as such--and back peddled (he was just throwing number around). More recently, I thought Matt Simmons talk about gas prices was alarmist. But I take seriously the modeling work that people like Stuart Staniford and others are doing at the Oil Drum, ASPO, and James Hamilton at UCSD (there are many more, but these names come to mind). The accuracy of the models is improving.

I think the Simon/Ehrlich bet is a good example (which Kling has been talking about) of survivor's bias or hindsight bias that libertarians commonly use to ignore looking at the facts on the ground.

N: I certainly don't recommend prophecies of doom and gloom. I do recommend looking at the facts on the ground--if for no other reason than that there are good investment opportunties. Years ago, based upon models of energy production and consumption--oil, oil service, commodities, and even toyota--all seemed like a good bet. The've proven to be. Things are always as they were until they aren't, and faith does not an investment strategy make. Much better to look at the details. Kling said in a post a while back that civilization is fragile--in so many words--and I think in that he is right. People take a short experience--10,000 years of civilization of some sort, 2500 years of more advanced thinking, about 500 years of enlightened thinking, and maybe 200 years of industrial society--and then assume all is a given. That's all I'm saying. I find that libertarians--nothing against them--often have a bias towards optimism--sort of like taking too much prozac. Hence their bias against malthus. They hate his ideas.

"I tend to dismiss malthusian prophecies on the basis that the weight of human history doesn't suggest to me there are any limits on innovation. What evidence do you have, given the obstacles that we have overcome to arrive into the 21st Century, that we won't be able to survive the heat death of the universe?"

Is this satire? I think those of us that aspire to "survive the heat death of the universe" can acknowledge that there are all sorts of apparent limits on innovation. We're running around with these monkey brains, for starters.

General Specific: I agree we need empiricists, not "libertarians" or any other belief-as-cheer descriptor that could situationally lead to policy that not empirically demonstrated to be best to accomplish a particular goal (such as mutual persistence in the face of aging and existential risk).

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